The Silent Strain: How Debt Takes A Toll On Mental Health

A Note From Patricia:

Hello and welcome to Forbes Advisor’s Weekly Brief, where each week we’ll dive into the realities of consumer finance and empower you with knowledge to help make your financial journey easier.?

If you are one of the millions of people bogged down by student loan debt, credit card debt, or any other kind of financial hardship—you’re not alone. According to the most recent data from the Federal Reserve, about three-fourths (77%) of American households are dealing with some form of debt. With consumers squeezed by the rising cost of living and inflation, it’s natural to feel overwhelmed.?

This week, we take a deeper look at just how financial strain can impact your psyche. A new survey by Forbes Advisor uncovered debt's impact on your mental health, relationships, spending habits and more. We also provide tips on navigating these fiscally frustrating times and an outlook on future financial prospects.

We would love to hear your thoughts or experiences in the comments section below. Have a wonderful day and hope to hear from you soon.

Sincerely,

Patricia Louis

Editor, Forbes Advisor

More Than Half Of Americans Say They're Stressed Because Of Debt

Dealing with your debt is more than just a financial challenge—it can also become a battle for your mental health. According to our new survey findings, more than half (54%) of respondents say they are often or always feeling stressed by their debt circumstances.?

While debt can feel like a personal problem, its consequences could put a strain on your loved ones as well.? A staggering 8 out of 10 survey respondents say their financial stress has hurt their relationships. It can also have lasting, devastating consequences; a similar survey found 37% of people cited financial problems as the cause of their divorce.?

Whether you’re still chasing credit card rewards or simply don’t make enough money to cover your weekly bills, breaking free from the cycle of debt can be tricky, both literally and psychologically. Close to three-fifths (72%) of respondents say they are somewhat or very likely to go further into debt when they feel stressed.?

How can you break the debt cycle? Survey respondents reported strategies such as getting a second job or selling their property to become debt-free.??

If you want to effectively break free from the vicious debt cycle while prioritizing your mental well-being, consider these strategies:?

• Determine which debt you want to repay first: While it may seem logical to pay off your oldest debt first, it’s not always the most practical. Different types of debt can be more damaging to your credit, or more costly, than others, so it’s important to come up with an organized plan to pay it off. There are many methods of debt payoff strategies out there, like the debt avalanche method, that tap into your psyche and help you gain stronger mental footing while slashing your debt.
• Cut back on nonessentials: Before buying something, ask yourself if it’s a need or a want. Some experts recommend waiting 24 hours before making a purchase to cut down on impulsive buys. Do you really need all those streaming services or takeout orders? Finding areas to pull back on spending can free up money and help you pay off your debt faster. Consider using a budgeting app to help identify these areas and demolish your debt faster.
• Stay positive and seek support: Your mind is as important as your wallet. Break your financial goals into smaller, manageable goals that are more attainable. Celebrating these small victories can help you stay motivated. Find stress-relieving activities such as exercise or talking to a counselor.

The good news is, it’s not all doom and gloom; despite the toll debt can have on mental health, consumers are optimistic for a brighter future. More than one-third (38%) of respondents expressed belief they’ll be free from debt within five years.?

These findings exhibit the importance of finding ways to cope and seek help when you need it. Whether it’s consulting a financial advisor or a therapist, it’s important to know you don’t always have to handle your monetary woes on your own.?

Read more tips on managing your debt and to educate yourself on the connection between finances and your mental health.

Related Stories:?

• 6 Best Places To Save Money And Earn Interest
• You Should Get A Financial Advisor
• Best Debt Management Companies Of October 2023

Here’s what else is going on in the news this week:

• 2024 Social Security Benefits Up 3.2% Amid Lower Inflation - The average Social Security payment will rise by more than $50 per month starting in January, thanks to the federal government’s 3.2% annual cost-of-living adjustment, or COLA. Here’s what you should know.
• 10 States Sue FEMA To Block Higher Flood Insurance Premiums -Ten states are suing the Federal Emergency Management Agency to try and halt its new pricing system for flood insurance. Here’s what homeowners should know.
• The Price Of Stamps Will Be Going Up—Again. - For the fifth time since 2021, the U.S. Postal Service is proposing to hike the price of a new first-class Forever stamp from 66 cents to 68 cents, starting in late January. The cost of sending a postcard would rise from 51 cents to 53 cents.